Bass Hotels & Resorts

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Bass Hotels & Resorts

also known as: holiday inn founded: 1954

Contact Information:

headquarters: 3 ravinia dr., ste. 2900
atlanta, ga 30346-2149 phone: (707)604-2000 fax: (707)604-5403 url: http://www.holiday-inn.com

OVERVIEW

Bass Hotels & Resorts, the hotel business of Bass PLC, operates or franchises more than 2,600 hotels with about 450,000 guest rooms in 75 countries and territories. Operated under the banner of Bass Hotels & Resorts, previously known as Holiday Hospitality (and Holiday Inn Worldwide before that), are full-service Inter-Continental Hotels and Holiday Inns, as well as the Holiday Inn Express, Holiday Inn Select, Holiday Inn Hotel & Suites, Holiday Inn Sun Spree Resort, Holiday Inn Garden Court, and Crowne Plaza brand hotels.

The original Holiday Inn operation, from which Bass Hotels & Resorts has sprung, was founded by Memphis real estate developer Kemmons Wilson to fill what he saw as an enormous need for decent lodging for the American traveling public. It was an idea whose time had come. The chain quickly grew, spreading across the country through an aggressive franchising program. Before long Holiday Inns began to pop up outside the United States, spreading through Canada, into Mexico, across Europe, and eventually to almost every continent on earth.

COMPANY FINANCES

As a wholly owned subsidiary of Bass PLC, Bass Hotels & Resorts is not required to disclose details of its financial operations. However, it is known that the Holiday Hospitality (before the name change) operation generated revenue of $1.1 billion in fiscal 1996, or 14 percent of Bass's total revenue of $8.0 billion. The Holiday Hospitality operation posted net earnings of about $305 million, or about 26 percent of Bass's total net income of $1.2 billion.

ANALYSTS' OPINIONS

"As surprising as it was when Timothy Lane resigned last fall from the top spot at Holiday Inn Worldwide after just seven months on the job," wrote Melanie Gibbs in the May 1997 issue of National Real Estate Investor, "it was perhaps even more unexpected when Bass PLC tapped hospitality industry outsider Thomas R. Oliver as president, chairman, and CEO of its Atlanta-based hotel division in February. But this move might just be what Holiday Inn needs to upgrade the quality on a brand that the Wall Street Journal characterized last fall as having 'a somewhat dowdy image'."

The optimism with which many regarded the appointment of Oliver appears to have been justified. In little more than a year on the job he had restructured management, engineered the acquisition of Inter-Continental Hotels from Japan's Saison Group, and given the company a couple of name changes. The management structure was realigned so that each hotel brand has its own president. Each president reports directly to Oliver. The Inter-Continental acquisition added 187 operating hotels to the Holiday Hospitality family, as well as another 24 hotels that were in development.

HISTORY

Kemmons Wilson founded the Holiday Inn hotel chain in 1952. Wilson, a Memphis real estate developer, and his family had taken a motor tour of the United States and found less-than pleasant lodging during their journey. He was aware of the Depression-era problems the motel (derived from the words motor and hotel) industry had faced, particularly the negative image the public had of motels. Other issues at that time included the issue of whether women should work in motels and how to deal with the constant bargaining for fees in the absence of set room rates.

The first Holiday Inn opened in Memphis, Tennessee, in August 1952. Each of the 120 rooms had a private bath, air conditioning, and a telephone as well as a host of luxury amenities and attractions such as a swimming pool, dog kennels, free parking, and the now legendary free stays for children under the age of 12. The concept was that each property would be located along major highways, particularly frequently traveled roads, to serve as handy stopovers for road-weary travelers. To build name and brand identities, all of the hotels were basically similar in their appointments and layout, giving customers confidence that they could expect a consistently pleasant stay at any Holiday Inn they might choose.

Holiday Inns of America was incorporated in 1954 to manage the finances and franchising of the properties, as well as to assure uniform quality standards at each property. Kemmons took the company public in 1957 and immediately sold the entire initial public offering—unheard of in those days. Expansion of the chain continued at a dizzying rate through the 1960s with a new property opening every few days. This phenomenal growth was fueled in part by President Dwight D. Eisenhower's massive interstate highway construction program.

Wilson, who is credited within the hotel industry for having created the concept of franchising, began seeking the financing of institutional investors in 1963. The company was also able to improve and eventually grew from a motel concept and image to that of a roadside hotel. The one-thousandth Holiday Inn was opened in 1968. Soon after the company bought Trailways bus company and Delta steamship line, Holidays Inns of America began to offer packaged travel. Wilson retired from the company in 1979.

The advent of affordable air travel, which had begun in the 1970s, eventually had an impact on the corporation. To take advantage of the sharp increase in air travel, Holiday Inn opened locations in close proximity to airports. During this period the company made a number of acquisitions, including Harrah's hotel-casinos. Shortly before the Harrah's purchase, the company dumped Trailways, as bus travel had fallen out of favor with the traveling public.

During the 1980s Holiday Inn attempted to reposition itself in the light of increased competition. Then-CEO Michael Rose, newly appointed in 1981, decided to create two new hotel chains to offset the problems and lure in a new market niche of travelers. These were Embassy Suites, aimed at the upscale business traveler, and Hampton Inns, a budget hotel chain. Both began operations in 1984. Soon after the company acquired two additional hotel chains that were merged into the existing chains.

Still more changes were to come. In 1985 the company issued 6.3 million new shares of stock to be purchased by the corporation. The name of the company was changed to Holiday Corporation and new headquarters offices were opened. A year later real estate mogul Donald Trump announced he had acquired a tiny share in the company, ostensibly to alert management to a possible Trump takeover. Rose decided to recapitalize the corporation to deflect Trump's interest in purchasing Holiday. Now that the company had $2.4 billion in debt, primarily in junk bonds, Trump was no longer interested. The resulting deal left Rose and other managers with a combined 10-percent interest in Holiday Corporation. Most of the other concerns were doing well, but Holiday Inns were badly in need of major renovations, which fueled the public perception that "the chain was past its prime." Rose wanted to dump Holiday Inns regardless of the cost.

In 1988 Holiday Inns International, owner of all the properties outside North American and 13 within the United States, was purchased by Britain's Bass PLC. Two years later Bass completed the $2.23-billion deal by purchasing all the Holiday Inns in the United States from Holiday Corporation. Bass, hearing more and more feedback from travelers that the Holiday Inn chain was getting a little tired looking, embarked on an ambitious renovation campaign.

Holiday Corporation changed its name to Promus Companies after the purchase of the Holiday Inns group by Bass PLC. Promus would continue to oversee its casinos and three chains—Hampton Inn, Embassy Suites, and Homewood Suites hotels. Bass executives attempted to spruce up the aging properties in the United States with a $1-billion renovation campaign that began in 1995. It attempted to create additional market share across the board by expanding Crowne Plaza-branded properties, and in 1991 created the business-like Holiday Inn Express to reach budget and business travelers. By 1995 Crowne Plaza and Holiday Inn Express had about 100 and 350 properties, respectively.

Through the late 1980s and 1990s the company went through numerous restructuring and management changes. Bass was investing capital funds in various updates and renovations, but despite the investment, none paid off for Bass and the Holiday Inn division damaged its bottom line considerably. So much so that in 1992 it filed a lawsuit against Promus, contending that Promus withheld key information from Bass during their negotiations. The result: Bass contended that without that financial information, it obviously had paid an exorbitant price for the chain. In the ensuing years—1993, 1994, and 1995—profits rose. Promus paid $49 million in a settlement in 1995.

Profits for the chain increased 18.9 percent in 1996. However, in December 1996, the company sold ownership and/or management of 61 of its Holiday Inn properties in the United States and Canada to Bristol Hotel Co. for $659 million. Despite the sale to the Dallas-based company, Holiday Inn Worldwide decided to maintain its company-managed Crowne Plaza hotels plus about 100 company-managed Holiday Inn and Crowne Plaza branded hotels in the Asia-Pacific and Europe/Middle East/Africa Division.

FAST FACTS: About Bass Hotels & Resorts

Ownership: Bass Hotels & Resorts is the hotel business of Bass PLC. Bass' American Depository Receipts trade on the New York Stock Exchange.

Ticker symbol: BAS

Officers: Thomas R. Oliver, Chmn. & CEO; Andrew MacFarlane, Exec. VP Finance; Cindy Durning, Sr. VP Human Resources

Employees: 10,300 (1997)

Principal Subsidiary Companies: Bass Hotels & Resorts is the parent to Holiday Inn, Crowne Plaza, Holiday Inn Express, Holiday Inn Select, Holiday Inn Garden Court, Holiday Inn Sunspree Resorts, and Staybridge Suites.

Chief Competitors: As a leader in the lodgings industry worldwide, the major competitors of Bass Hotels & Resorts include: Hilton; Hyatt; Marriott International; Ramada; and Westin.

The latest of the management changes came in 1997, shortly after the appointment of Thomas R. Oliver, former Federal Express executive, as chairman and CEO in February of that year. Oliver wasted little time in trying to reinvigorate the company. He restructured the company's management so that each hotel brand has its own president, each of whom reports to Oliver. Later in 1997, under Oliver's direction, Holiday Inn Worldwide became Holiday Hospitality. Oliver also embarked on a campaign to give each of the hotel brands under the Holiday Hospitality banner its own distinct personality. In the process of making the changes he felt necessary to make each of the hotel brands a leader in its category of the business, Oliver ruffled a few feathers among Holiday Inn franchisees. That aside, the new chief executive seemed confident he could achieve his goal on time. In an interview with the Atlanta Constitution and Journal in April 1998, Oliver explained his rationale for the move: "I needed to have much better clarity of responsibility for people working the brands."

In another bold move in early 1998, Oliver successfully negotiated an agreement for the acquisition of the Inter-Continental hotel chain from Japan's Saison Group. The transaction was valued at $2.9 billion and included Saison's Forum hotel chain as well as an interest in Global Partner, another hotel chain. Under the agreement the world headquarters of Inter-Continental and Forum will move to Atlanta. The Inter-Continental chain has 187 hotels with a total of 65,000 rooms in 69 countries. An additional 24 hotels are under development. Forum operates 20 hotels. In May 1998, to reflect the broadened range of hotel brands, the name of Holiday Hospitality was changed to Bass Hotels & Resorts.

A couple of months after the Inter-Continental acquisition, the company announced it was changing its name from Holiday Hospitality to Bass Hotels & Resorts to better reflect the expansion of the company's hotel brand names.

STRATEGY

In 1997, after the appointment of Thomas Oliver, Bass Hotels & Resorts sought to better position and clarify each of the individual brand identities within the corporation—full-service Holiday Inns, Holiday Inn Express, Holiday Inn Select, Holiday Inn Hotel & Suites, Holiday Inn Sun Spree Resort, and Holiday Inn Garden Court hotels. Each brand was given independent responsibility for sales, marketing, and franchising.

Recognizing that some of its older properties were badly in need of a fresh new look the company embarked on a major renovation campaign. During these renovations, which were completed in the fall of 1997, more than 1,300 hotels were remodeled. Some of the materials needed to finish this massive project included 1.7 million square yards of carpeting, more than 1 million square feet of floor tile, nearly 40,000 gallons of paint, about 650,000 rolls of wallpaper, and 129,000 drapes.

INFLUENCES

Among the trends that has shaped the strategy at Holiday Hospitality in the late twentieth century, probably none has been more significant than the realization that the traveling public is not uniform in their needs. Certain travelers are looking for a certain level of accommodation, while others have different demands. This has given rise to the creation of multiple hotel brands where previously all of a hotel company's properties were essentially the same. Some travelers today want the comfort of apartment-like accommodations if their business or pleasure travel compels to make an extended stay. Other travelers, carefully watching their expenses, are quite content to settle in at a no-frills hotel.

CHRONOLOGY: Key Dates for Bass Hotels & Resorts

1952:: First Holiday Inn opens in Memphis, Tennessee
1954:: Holiday Inn of America is incorporated
1968:: The 1000th Holiday Inn is opened
1979:: Founder, Kemmons Wilson, retires
1981:: CEO, Michael Rose is appointed
1984:: Two new hotel chains, Embassy Suites and Hampton Inns, begin operations
1985:: Company name changes to the Holiday Corporation
1988:: All of Holiday Inns International are purchased by Bass PLC
1990:: Bass purchases all of Holiday Corporation's U.S. holdings
1995:: Bass embarks of a $1 billion renovation campaign for its Holiday Inns
1997:: Thomas Oliver becomes chairman and CEO of the recently renamed Holiday Hospitality
1998:: The name, Holiday Hospitality, is changed to Bass Hotels & Resorts

CURRENT TRENDS

Reflecting its expansion beyond the Holiday Inn line of hotels, Holiday Hospitality changed its name to Bass Hotels & Resorts in May 1998. Explaining the company's reasoning behind the name change, Thomas R. Oliver said, "With the recent addition of Inter-Continental to our organization, it became apparent that our previous corporate identity no longer reflected the diverse nature of our global brand portfolio. This change also is an opportunity for us to strengthen the association of our brands with our parent company in investors' and consumers' minds, and reflect a corporate identity consistent with other Bass businesses."

CORPORATE CITIZENSHIP

Bass Hotels & Resorts puts a high priority on community service and undertakes a number of projects each year in an attempt to improve life in the communities in which it operates. One example of such civic-mindedness was the company's donation of $500,000 to Give Kids the World in November 1997. Give Kids the World is a nonprofit organization that has helped to make dreams come true for more than 31,000 children with terminal illnesses by giving them and their families a sixday vacation in central Florida. Each family receives complimentary accommodations, tickets to area attractions including Disney World and Universal Studios, meals, and local transportation.

Bass Hotels CEO Thomas R. Oliver, in presenting the company's check to Henri Landwirth, founder of Give Kids the World, said: "For more than 40 years, families, particularly children, have been very important parts of our lives at this company. No one ever knows what challenges life may present them, and we're more than pleased to play a part in helping make a difference for some very special children and their families."

GLOBAL PRESENCE

As in much of the business world today, consolidation has taken hold in the lodgings industry. For Bass Hotels & Resorts, in particular, this trend is underscored by the company's acquisition in early 1998 of the Inter-Continental hotel chain from Japan's Saison Group. The transaction added more than 200 new hotels to the company's operations. The Inter-Continental properties fall into the luxury, full-service categories of accommodations.

EMPLOYMENT

Holiday Inn Worldwide has had a strong commitment to employee training as far back as the days of founder Kemmons Wilson. "The Holiday Inn University contributed to the consistency of the company's service by providing for the education and professional advancement of its franchisees and property managers, who were offered the opportunity to study management topics, housekeeping systems, and employee relations in short-term, intensive seminars on a college-like campus, completed with sports facilities."